Big U.S. farms get even bigger as trade war wears on - Entrepreneur Generations

America's farms are undergoing a Darwinian winnowing because of the trade war with China: "The number of U.S. farms fell by 12,800 to 2.029 million in 2018, the smallest ever, as the trade war pushes more farmers into retirement or bankruptcy," Mark Weinraub reports for Reuters. "By the end of 2018, the average U.S. farm size rose to 443 acres, a 12-year high and up from 441 million in 2017, according to the latest U.S. Department of Agriculture data."

The smallest farms, which tend to have the fewest financial resources, are at the highest risk of bankruptcy. The farms that survive are more likely to be large operations with the funds to weather the storm. "The declining number of U.S. farmers could hurt the world's top grain merchants such as ADM and Bunge, who will have fewer suppliers," Weinraub reports. "Additionally, farmers will have less need to rent space in the merchants' grain silos as big farmers . . . have plentiful storage on their own farms."

The biggest farms can grow by buying or leasing farmland from exiting small farmers. Only the largest farms generally can get the loans to buy land and high-tech equipment for expansion. "They also receive deep discounts - as much as $40,000 for some combine harvesters that can cost as much as $400,000 - allowing them to upgrade more often," Weinraub reports. "Manufacturers are increasingly willing to cut such deals to keep clients as the number of customers falls."

Large farms benefit in other ways too. "Critics say the Trump administration's policy of compensating growers for lost sales due to the trade war pays the bigger farm operations more, since payments are calculated by acres farmed," Weinraub reports. A recent study found that the top 1% of aid recipients got an average of more than $180,000 in farm bailout money, while the bottom 80% got less than $5,000 in aid.

from The Rural Blog https://ift.tt/307ZhDY Big U.S. farms get even bigger as trade war wears on - Entrepreneur Generations

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